Korea-China Trade

Dusk falls over cargo containers stacked 3-high at Busan Harbour Cargo Terminal. Imports and exports constitute 33.7% of the total national economy. (Photo by Eastberliner via Wikimedia Commons)
Dusk falls over cargo containers stacked 3-high at Busan Harbour Cargo Terminal. Imports and exports constitute 33.7% of the total national economy. (Photo by Eastberliner via Wikimedia Commons)

 

According to the Ministry of Trade, Industry and Energy on May 6, Korea’s exports to China stood at US$42.5 billion from Jan. 1 to April 20, a 1.5 percent year-on-year gain. The number is a sharp decline, compared to an 8.7 percent increase during the same period last year. 

China accounted for 24.9 percent of the nations’ total exports, lower than the same period last year (25.1 percent). The share of China was 26.1 percent in 2014, the highest-ever annual result.  

Korea’s export growth rate to China in April is estimated to be 2.4 percent. In contrast, outbound shipments to the US and ASEAN posted double-digit growth of 19.3 percent and 17 percent, respectively. The phenomenon can be interpreted to mean that China’s recent sluggish exports and its slowdown in economic growth contributed to the overall drop. 

China’s total export volume fell by 3.4 percent in the first quarter. The country’s economy grew 7.4 percent in Q1, felling short of the economic growth rate of 7.7 percent in Q4 of last year, or its annual growth target of 7.5 percent. The fact that China is putting more weight on the expansion of domestic demand could be an opportunity for Korea, but a huge burden at the moment. 

According to data compiled by the Korea International Trade Association, the nation’s processing trade comprised 47.6 percent of the total exports to China in 2013, exceeding the 34.8 percent of Japan and the 36.1 percent of Hong Kong. However, a large number of Korean exporters are using China merely as a manufacturing base for exports to other countries. It means that despite the trade volume, their footing in the Chinese market is weak.

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